2000 (12) TMI 417 - AT - Central Excise

Summary

Issues:
Classification of spare parts for turbines under Chapter Heading 84.83 or 84.06; applicability of longer period of limitation under Section 11A(1) for duty demand; justification of penalty imposed.

Classification Issue:
The dispute centered around whether spare parts for turbines should be classified under Chapter Heading 84.83 or 84.06. The Department contended that the parts were classifiable under Chapter Heading 84.83, while the appellant claimed classification under 84.06. A classification list approved by the Department from October 13, 1992, to March 1993 classified the items under Chapter Heading 84.83, and since no appeal was filed against this approval, the classification became final. Consequently, the demand for differential duty on parts manufactured by the appellant during this period under Chapter Heading 84.83 was deemed lawful and not time-barred.

Applicability of Longer Limitation Period:
The appellant argued against the invocation of the longer period of limitation under Section 11A(1) by emphasizing that they had regularly filed statutory documents, which were relied upon by the Department in show cause notices. Citing various case laws, the appellant contended that the demand was time-barred. However, the Tribunal held that for the period from October 13, 1992, to March 1993, the demand based on the classification list approved under Chapter Heading 84.83 was valid and not subject to limitation due to the absence of an appeal against the classification.

Penalty Justification:
Regarding the penalty imposed, it was found that despite being informed that the spare parts should be classified under Chapter Heading 84.83, the appellant persisted in classifying them under Chapter Heading 84.06, leading to duty evasion. Consequently, the imposition of a penalty was deemed justified. However, considering the amount of differential duty payable, the penalty was reduced to Rs. 25,000.

Conclusion:
The Tribunal upheld the demand for differential duty on parts manufactured by the appellant from October 13, 1992, to March 1993, classified under Chapter Heading 84.83, as per the approved classification list. The demand on bought-out items was set aside as no further duty could be collected due to higher duty already paid at clearance. The penalty was reduced to Rs. 25,000 due to duty evasion. The limitation aspect was not discussed further, and the appellant was directed to recalculate the demand for the specified period.